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Staking Circle
Staking Circle
Apr 10, 2024
10 min read

Exploring Bitcoin Staking w/ Rootstock

Exploring Bitcoin Staking w/ Rootstock

Rootstock is transforming the Bitcoin ecosystem by combining Bitcoin's security with Ethereum's smart contract capabilities, which have been operational since 2018. Sam, speaking about Bitcoin staking through Rootstock, stressed DeFi's potential without having to give up Bitcoin, thanks to their POWPEG bridge, which ensures strict Bitcoin backing for R-BTC. With Rootstock Labs setting aside $5 million for development funding, the platform is on the verge of massive expansions aimed at increasing Bitcoin's utility in DeFi.

For those interested in the combination of Bitcoin's strength and Ethereum's functionality, as well as the innovative strides Rootstock is making in the DeFi field, the AMA highlights serve as a gateway for further exploration. Explore Rootstock's vision for expanding Bitcoin's horizons in the DeFi ecosystem, as well as how it has the potential to reinvent economic freedom and accessibility globally.

X Spaces: Exploring Bitcoin Staking

Speakers:

Index:

  1. RootStock Intro
  2. Bitcoin Staking On Rootstock
  3. Key Differentiators of RootStock
  4. The Bitcoin to Rootstock Bridging Process
  5. Understanding RBTC (Smart Bitcoin) and its Role
  6. The Impact of Rootstock on the BItcoin Ecosystem
  7. Bitcoin Ecosystem Growth
  8. Bitcoin Legal Tender
  9. Rootstock Development Inicaitives
  10. Rootstock Roadmap and Updates
  11. BitVM and Bitcoin Bridge

1. RootStock intro

  • Sam explained that Rootstock is the most prominent Bitcoin sidechain, also known as a Bitcoin L2, which started in 2018:

“So Rootstock is the largest and longest running Bitcoin side chain, often referred to as a Bitcoin L2”

  • Sam pointed out that Rootstock uses proof of work consensus and benefits from about 60% of Bitcoin's hashing power through merge mining:

“We are a separate blockchain cryptographically connected to the Bitcoin main chain through a process known as merge mining. So we use proof of work consensus, leveraging about 60 percent of the hashing power of the main Bitcoin network.”

  • He mentioned the security benefit of Bitcoin miners securing Rootstock's network, which attracts them for the extra income:

“So all of the Bitcoin miners are simultaneously merge mining Rootstock, which is what creates the security of the Rootstock network.”

  • Sam highlighted that Rootstock's compatibility with the Ethereum Virtual Machine allows dApp deployment directly on Bitcoin, attracting EVM builders and Solidity developers:

“What's really exciting about Rootstock as a network is we've got the connection to Bitcoin, but also it's EVM compatible. So anyone can deploy dApps on top of Bitcoin using Rootstock. (...) We're seeing more EVM builders and Solidity developers moving their protocols from other chains and launching them on top of Bitcoin using Rootstock,”

  • The Rootstock white paper was released in 2015, with the main network operational for over 2000 days and maintaining 100% uptime:

“I was just going to say, yeah, the white paper was first published back in 2015 and Rootstock launched on mainnet in 2018. So that's over 2000 days mainnet”

  • Sam planned to release a merge mining report detailing hashing power sources and mentioned about 62% of Bitcoin's hash power supported Rootstock in Q1 of this year:

“And over Q1, so January, February and March of this year. We've had about 62% of the hash power of Bitcoin has been securing the network, which is really cool.”

2. Bitcoin Staking On Rootstock

  • Sam explained Bitcoin is converted into Smart Bitcoin (R-B-T-C) for gas fees on Rootstock via a trustless bridge:

“So the really exciting thing about Rootstock is Bitcoin is used for gas on the network. So using a trustless bridge from the Bitcoin main chain, you can move your Bitcoin into rootstock where it takes the form of R-B-T-C, what we sometimes call smart Bitcoin.”

  • He pointed out Sovereign as the leading staking protocol on Rootstock, offering various staking options:

“And an example I can give you today is Sovereign. A lot of people on the call have probably heard of Sovereign. It's the largest DeFi protocol. in the world today, I believe, and it's built on top of Rootstock. They offer a number of different staking opportunities,”

  • Sam intrigued the audience with Sovereign's innovative products and the potential for 0% interest Bitcoin-backed loans, providing capital access without liquidating Bitcoin holdings:

“So you can get a loan from your Bitcoin with 0% interest, which is super interesting. So you don't have to sell it. and you can access that capital and then use it on other protocols in the network as well.”

3. Key Differentiators of RootStock

  • Sam described Rootstock's advantage of being the first of its kind, its cryptographic links to Bitcoin, and support from miners:

“I think the deep cryptographic connection with Bitcoin, the fact we have the support of the mining pools actually providing that security ”

  • He focused on the ongoing development of merge mining partnerships, providing extra earnings for Bitcoin miners from Rootstock's network:

“ And the reason that those Bitcoin miners choose to secure rootstock through merge mining is they earn the fees from the rootstock network for doing so.”

  • Rootstock contributes to Bitcoin's security and aims to enhance its value proposition:

“We should be working to contribute to the security budget of Bitcoin and extend the value of Bitcoin as well. And that's something that Rootstock does.”

  • Sam highlighted Rootstock's uniqueness in not having a separate monetary token, with Bitcoin exclusively used within the network:

“And that's why there isn't a competing money token on rootstock. Some other. networks that claim to be sidechains or L2s to Bitcoin. Gas is paid in a competing token to Bitcoin.”

  • He also talked about the opportunities on Rootstock to engage with NFTs and token launches, while maintaining a Bitcoin-centric approach:

“But there is also the opportunity to access NFTs. launch your own tokens that leverage the security of Bitcoin, whatever you might want to do. But at the core of it, Bitcoin is the kind of the gas fee token for the network, which we think is really important”

4. The Bitcoin to Rootstock Bridging Process

  • The main mechanism is the POWPEG bridge, now with enhanced security and over 3000 Bitcoins locked:

“You move your Bitcoin through a process called the POWPEG, the proof of work PEG, which is... uses multiple different layers of security to make sure that your Bitcoin is safe, locked in that peg. There's over 3000 Bitcoins locked into that peg today.”

  • He detailed alternative routes to access RBTC, including exchanges and various apps and services:

“So you could use an exchange to access RBTC on Rootstock immediately. Someone like Buenbit, Mount Pelerin, Decrypto. You could use... Some of the apps launched on top of Rootstock offer different bridging mechanisms.”

  • He named Symbiosis and cross-chain solutions like Oku as options for converting other tokens to RBTC on Rootstock:

“You can also bridge from many other networks using Symbiosis, which is a cross-chain aggregator, or Oku, or many other different sites.”

5. Understanding RBTC (Smart Bitcoin) and its Role

  • Sam affirmed R-BTC is pegged one-to-one with Bitcoin on the Rootstock network, ensuring seamless conversion and maintaining asset fluidity:

“So, as you move it over, it's always one-to-one pegs with Bitcoin and you can move it back through that bridge at any time and receive the same amount of Bitcoin back.”

6. The Impact of Rootstock on the Bitcoin Ecosystem

  • Sam related Rootstock's goals to Bitcoin's potential as a tool for economic freedom during Argentina's economic struggles, combined with Ethereum's smart contract abilities:

“Topic. And really, it goes back to the origins of Rootstock back in 2013 in Argentina. And the creators of the network back then were experiencing a devaluing currency (...) And at the same time that they were looking at Bitcoin as this tool for economic freedom, they also discovered Ethereum and the programmability that that allowed in a decentralized way. “

  • He outlined Rootstock Labs' objective to utilize Bitcoin for DeFi, enabling complex financial actions such as lending and saving:

“So we talk a lot about economic freedom and we also talk a lot about everyday DeFi. I know the audience today, a lot of you are probably very advanced DeFi users. We believe the real next chasm to cross for DeFi is to move to a world where everyone can interact with it,”

  • Rootstock Labs is striving for global DeFi adoption, providing people access to everyday financial tools without central authority restrictions or high fees:

“DeFi isn't just for the select few, but everybody has the opportunity to interact with it, to protect their savings from inflation, to be able to send currency around the world without limitations or high fees.”

7. Bitcoin Ecosystem Growth

  • Sam observed a resurgence of interest in Bitcoin due to ETFs, Ordinals, and BRC20 tokens, which present new opportunities:

“There. The recent kind of approvals of Bitcoin ETFs and the launch of things like Ordinals and BRC20 tokens has brought a lot more excitement back to the Bitcoin ecosystem.”

  • He stated that the DeFi market for Bitcoin might be smaller than Ethereum's, but it has potential to leverage trillions through sidechains like Rootstock:

“The Bitcoin DeFi ecosystem. the size of it pales in comparison to the DeFi activity happening on Ethereum. But that being said, there's trillions of dollars locked inside Bitcoin that people could be putting to work on side chains like Rootstock. And that's where we think the big opportunity is and what we'll see happening over the next few years.”

8. Bitcoin Legal Tender

  • El Salvador has set a precedent by adopting Bitcoin as legal currency. Additionally, Argentina, has made it legal tender as well, which might boost DeFi exploration using Bitcoin:

“ Think El Salvador is a classic example, but also in Argentina now. Argentina have accepted Bitcoin as a legal tender, as something that can be used to pay for different services.”

9. Rootstock Development Initiatives

  • Sam announced that Rootstock Labs is allocating $5M in grants throughout the next year to encourage development on Rootstock:

"Rootstock Labs is committing $5 million over the next year for grants to anyone looking to build on top of Bitcoin using Rootstock.”

  • The grants start at $25,000 upwards, to support developers creating businesses and services using Rootstock:

“There's lots more information about this on the Rootstock Labs website, but essentially there are grants ranging from $25,000 up ”

10. Rootstock Roadmap and Updates

  • Significant updates are anticipated at Bitcoin++ in Austin and Bitcoin Nashville later this year:

“I think one thing I'd say to everyone is keep your eyes out on the stage of Bitcoin++ in Austin this year, as well as Bitcoin Nashville later in the year for some big announcements from some of the core contributors.”

  • The Rootstock community contributes to its evolution through proposals, akin to Bitcoin's BIPs.

“They're referred to as RSK IPs in the same way you have bits on Bitcoin. And those proposals cover a whole different wide range of things.”

  • Initiatives to integrate Lightning Network swaps and introduce Ordinals to Rootstock are in progress.

“We've introduced Lightning Network swaps, so swapping LBTC on Lightning straight to RBTC on Rootstock.”

  • More EVM protocols are considering Rootstock integration, potentially bringing in staking, DEXs, and other services.

“There's also been a big wave of new protocols, especially EVM protocols, integrating Rootstock as a way to build a bridge to Bitcoin. I expect to see a lot more of that in the coming months as well, especially in terms of staking, DEXs, bridges, aggregators, lots of interesting projects,”

11. BitVM and Bitcoin Bridge

  • Ongoing research is underway for BitVM, aimed at creating an unrestricted bridge between Rootstock and the Bitcoin mainchain.

“Then. I guess like a final thing to mention here, I talked about the Bitcoin bridge that connects rootstock and Bitcoin main chain. There is a research project at the moment investigating BitVM. A lot of you may have already heard about BitVM to create an entirely permissionless Bitcoin bridge connecting rootstock and Bitcoin.”

  • The BitVM white paper was published in October of the previous year, possibly leading to a significant innovation in trustless bridging.

“October last year, people didn't even know would ever be possible. We're becoming, we're reaching a reality where that will become possible. And Rootstock Labs and a number of other contributors to Rootstock have formed a bit of a super squad investigating a way to use BitVM, evolve BitVM and implement it in a way to create a trustless bridge between Bitcoin and Rootstock main chain.”

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